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Crops witness day of extremes, as softs soar

It ended up a day of extremes on many food commodity markets, with rice falling its daily limit, and cocoa and sugar rocketing multi-decade highs. Chicago's big guns, however, were caught in between.

In the end, corn, soybeans and wheat all closed higher, but not without a struggle. Wheat was notably weak until a late rally attributed to profit taking lifted the March contract 0.5 cents higher to $5.27 ¼ a bushel.

US wheat failed to figure, once again, in the biggest tender from the biggest importer, Egypt, in more than a year, although that had been largely expected given the uncompetitive nature of Chicago prices.

'A few problems'

Soybeans were somewhat more convincing in ending up 4.5 cents at $10.59 ½ a bushel for January delivery, helped by a US announcement of a sale of 116,000 tonnes of US crop to China.

One of bulls' worst fears is of a drying up of Chinese demand, with the prospect of South America's crop coming onstream early next year, although that it not proving without its hitches.

US Commodities noted a "few problems in Southern Brazil. Too wet but improving".

Corn, meanwhile, failed to fulfil expectations after hitting $1.10 and triggering buy stops which gave itself another boost to hit a six-month high of $4.13 ¾ a bushel.

But in closing up 2.75 cents at $4.10 ¼ a bushel it at least registered a fifth successive positive close.

Fund rebalancing

One of the factors driving corn is the prospect of rising demand from ethanol plants.

Investors will later this week get an indication of how tight the market may become, when Informa Economic unveils prospective US sowing data for next year.

On Wednesday, rising crude prices, up 2.8%, also helped.

There is still some background noise too of fund buying said to be coming the market's way next month, thanks to fresh money, with alleged fund switches out of energy set to have an impact too.

"The most recent guesses on index fund purchases due to rebalancing after the first of the year have them buying 65,000 tonnes of corn and 20,000 tonnes of wheat and soybeans," Benson Quinn Commodities said.

Softs soar

There was no hanging around on the soft commodities markets, where London cocoa hit a 32-year high of £2,329 a tonne for the second-in contract, May.

New York's March lot ended 4% higher at $3,498 a tonne having hit a 30-year high of $3,510 a tonne earlier.

Investors continue to be concerned at weakening bean arrivals from plantations in Ivory Coast, the top-ranked producing state.

White sugar, meanwhile, set a fresh record high in London and, in New York, raw sugar closed up 1.12 cents at 25.94 cents a pound for March delivery.

There was "not a bearish report in sight", David Sadler at Sucden Financial Sugar, said.